Business
Fareport Capital Inc. Announces Changes to Proposed Financing and Debt Restructuring
Fareport Capital Inc. Announces Changes to Proposed Financing and Debt Restructuring.
About this update from Falco Resources Ltd.
[{"type":"text","content":"\n\n\n\n\nTORONTO, Oct. 24 /CNW/ - Further to the news release of September 25,\n2006, in which Fareport Capital Inc. (TSX-V: CAB) (\"Fareport\") announced that\nit proposed to restructure its affairs, settle outstanding litigation,\ncomplete a conversion of substantially all of its current debt obligations, a\nconsolidation of its issued and outstanding common shares, the creation of a\nnew class of preference shares and a private placement financing of its common\nshares (the \"Restructuring\"), all subject to shareholder and regulatory\napproval. While Fareport still proposes to complete the above restructuring,\nthe terms on which it will occur have been substantially altered.\nFareport now proposes to enter into a financing transaction with arm's\nlength investors (the \"Investors\") whereby the Investors will make a\n$2,080,000 commitment to acquire new common shares of Fareport. Specifically,\nthe Investors will first advance to Fareport $200,000 by way of an unsecured\nsubordinated loan bearing interest at 12% per annum, evidenced by a promissory\nnote, to be used as working capital (the \"Advance\"), which Advance will be\ncredited towards a subsequent private placement of $2,080,000 worth of\nFareport common shares, subject to Fareport entering into debt settlement\nagreements with Fareport's creditors. The agreements will provide for a cash\npayment by Fareport of approximately $1,075,000 in the aggregate to be\nallocated amongst the creditors. The balance of Fareport's debt, being\napproximately $2,100,000 (the \"Debt Balance\"), will be sold by the creditors\nto BG Capital Management Corp. (\"BG\"), an arm's-length third party, at a\nsignificant discount to face value for an aggregate of $460,000.\nFareport then proposes to complete a 100:1 share consolidation, followed\nby the issuance of 1,300,000 post-consolidation common shares to the Investors\nat a price of $1.60 per common share (for aggregate cash proceeds of\n$2,080,000, including the Advance) (the \"Private Placement\"). Fareport will\npay a commission/financing fee of $46,000 to BG (10% of the $460,000 paid for\nthe Debt Balance). The Debt Balance will be converted into 1,680,000 common\nshares, which is equal to 50% of Fareport's issued and outstanding common\nshare capital following the completion of the transactions described herein.\nAs a result of th...